2014 (2) TMI 920 - AT - Central Excise

Denial of Cenvat credit ISD - Services can be treated as input services under Rule 2(l) of CENVAT Credit Rules, 2004 OR not - Nexus between services rendered in Corporate Office and RDCs with the manufacturing activity - Waiver of Pre-deposit Held that - The services were rendered at the applicant s Corporate Office as Regional Distribution Centers (RDC) - Merely because the input service tax is paid at a particular unit and the benefit is sought to be availed at another unit, the same is not prohibited under law - The contention of the ineligibility of credit on the input service credit on transportation from depot to retail outlets by the revenue holds ground - Following decision of asessee s own previous case 2013 (12) TMI 923 - CESTAT CHENNAI , stay was granted on all the items of services except in respect of tax relating to transportation of goods from RDCs to retail outlets. - Conditional stay granted.

Summary

Issues:
1. Interpretation of 'input services' under CENVAT Credit Rules, 2004.
2. Nexus of services rendered at Corporate Office and Regional Distribution Centers with manufacturing activity.
3. Disputed CENVAT credit availed for services like Man-power Recruitment Agency, Management Consultants, Royalty Services, and transportation of goods.
4. Confirmation of amounts and penalties for the disputed CENVAT credit.
5. Pre-deposit requirement for admission of appeals and stay on collection of balance adjudged dues.

Analysis:

1. The judgment revolves around the interpretation of 'input services' under the CENVAT Credit Rules, 2004. The dispute arises from the applicant availing CENVAT credit on various services like Goods Transportation, Courier, Car Hire, Telecom Maintenance, etc., received at their Headquarters and distributed for use in payment of duty on goods cleared from different factories. The Revenue contended that these services rendered at Corporate Office and Regional Distribution Centers lacked nexus with manufacturing activity, leading to the initiation of proceedings to deny the CENVAT credit.

2. The applicant argued that the descriptions of 'input services' provided in the show-cause notice and the impugned order were unclear, emphasizing a detailed breakdown of each service rendered and credit taken against them for different periods. The Revenue issued show-cause notices for two different periods, contesting the eligibility of services like Man-power Recruitment Agency, Management Consultants, Royalty Services, and transportation of goods from Regional Distribution Centers to Retail Outlets as 'input services' under the CENVAT Credit Rules.

3. Following adjudication, significant amounts were confirmed as dues along with interest and penalties. The applicant, aggrieved by this order, filed appeals before the Tribunal challenging the denial of CENVAT credit. Notably, the disputed services included Man-power Recruitment Agency, Management Consultants, Royalty Services, and transportation of goods, with specific mention of approximately Rs.20 lakhs involved in the transportation of goods from Regional Distribution Centers to Retail Outlets.

4. The Tribunal referred to a precedent order in the applicant's own case, where stay was granted on various services except for the tax related to transportation of goods from Regional Distribution Centers to Retail Outlets. In alignment with the precedent, the Tribunal directed the applicant to make a pre-deposit of Rs.20,00,000 within six weeks, with the balance adjudged dues waived for admission of the appeals and collection stayed pending the disposal of the appeals.

5. The judgment concluded with the directive for the pre-deposit requirement to proceed with the appeals, highlighting the specific amount and deadline for compliance. The decision aimed to balance the interests of the applicant and the Revenue by ensuring a pre-deposit while granting relief on the balance dues for the disputed CENVAT credit, subject to the outcome of the appeals.